October 2026 | Pumpkins, Complications, and Diversification
Happy October from Perennial Wealth Advisors! Before we get down to business, I’d like to share a seasonal idea. I’m not much of a “décor” guy, but the other day I brought home a $6 pumpkin from the grocery store and sat it next to the front door. My wife loved it. Either she really likes pumpkins, or her expectations for me have fallen quite low… Regardless, it’s a quick act that might help you “fall” into good graces. Below I’ve included a market update, thoughts on rebalancing and diversification, and a few friendly reminders.
MARKET UPDATE
If I was to ask you, without looking, what some of the current stock market news headlines were, what would you tell me? You might mention rising energy costs (particularly diesel), rising inflation, the continued war in the middle East, and perhaps the upcoming election season. All of these are great points.
However – as we have discussed before – financial media has quite a consistent track record of overweighting negative news in an attempt to generate fear, and in turn, sell more advertisements. They, unfortunately, are not financially incentivized to help you reach your most cherished lifetime goals. So, if the headline doom is not the full story, what is?
Government bond (“treasuries”) yields have gone up significantly; i.e. safe assets are paying again. Rising energy costs continue to be a big driver in persistent inflation. The US, Japan, and India are showing strong growth. At Tuesday’s close the Magnificent Seven had an estimated combined market cap of $25 trillion, meaning roughly 35% of the S&P 500 Index is composed of these 7 stocks. Though earnings remain strong, much of this strength is concentrated in these technology stocks. Lastly, valuations on international companies look quite attractive as they are trading at a significant discount compared with domestic stocks.
REBALANCING & DIVERSIFICATION
What is the moral of the story? Diversification still matters, and we maintain this through rebalancing.
In this quarter’s Guide to the Markets, David Kelly referenced a particular slide (found here on pg. 63 ) representing the allocation drift of a 60% stock/40% bond portfolio, since 2019. Left alone, this same portfolio almost 7 years later would now be a 75% stock/25% bond portfolio. Hence, the continued importance of taking chips off the table by selling highly appreciated assets, in order to buy underappreciated (discounted) assets.
As the year comes to a close, we are actively making trades to rebalance accounts. We have also been strategically refilling cash and money market funds for our retired clients who are actively taking distributions from their portfolios, especially while the market is near all-time highs.
YOUR LONG-TERM PLAN
As always, I have no idea what the market has in store for the short-term. What I do know is since 1950, the market has pulled back at least 20% (intraday) 17 times, which comes out to an average of once every 4.5 years. Keep in mind that the most recent one ended 4 years ago.
When the next drawback comes (and I assure you it will), you will yet again be posed with two simple options. 1. Risk the success of your thoughtfully crafted long-term plan by selling to cash and potentially locking in losses you will never be able to recuperate, or 2. Remain patient trusting in the wisdom that only a change in your goals should lead to a change in your plan, not the current economic environment, whatever it may be.
Have your goals changed? Give us a call. Have they not? Stay the course.
FRIENDLY REMINDERS
Tax Returns – If you filed an extension for your 2025 tax return, October 15th is the final deadline.
Medicare Open Enrollment – Takes place from October 15 to December 7. If applicable, review your part D and Medicare Advantage coverage given formularies and premiums change every year.
RMDs – Required minimum distributions are due by December 31st.
Qualified Charitable Distributions – If you’re 70½ or older, giving directly from your IRA can satisfy your RMD without adding to your taxable income.
Roth Conversions – Must be completed by December 31st. Unlike IRA contributions, they can’t be made up to the tax filing deadline.
Trump Accounts - In early October, most children under 18 with a valid SS were automatically enrolled in a Trump account. Parents must go to the trumpaccounts.gov website to claim the account.
Holiday Scams – Fraud attempts rise this time of year. Please remain cognizant and never act on emails demanding financial action.
Life Changes – If you’ve had a new job, a retirement date, a move, a marriage, or a new grandchild please consider updating your financial plan.
If you’ve made it this far, thanks for reading. As always, please do not hesitate to call if you have any questions.
Sincerely,
Brock Hedgecoke, CFP®
Financial Advisor